According to the most recent Weekly China Report published by Commodore Research, one issue that has continued to limit the ramping up of coal production in China has been the wave of accidents at mines and what has become an almost routine loss of lives of Chinese coal workers. For just one seven-day period in late 2016 alone, Commodore Research is aware of 55 deaths at three separate coal mines, and already this year there have been an additional 12 deaths. The work stoppages that occur whenever there are deaths has affected production, and so too have province-wide work stoppages and inspections that have at times followed when there have accidents and deaths.

According to Commodore Research, one province-wide inspection and temporary halt in production occurred in December in Hubei province after an explosion at the Xinjia Coal Mine in Hubei resulted in the death of 11 coal miners. That accident occurred on December 5th and came two days after an accident at a coal mine in Inner Mongolia province resulted in the deaths of 32 miners. Just two days prior, 22 miners had died in an accident at a coal mine in Heilongjiang Province. In addition, this year alone has seen the deaths of 12 coal workers at the Xingyu Coal Mine in Henan province after an accident occurred on January 4th.

Overall, the wave of deaths, inspections, and temporary work stoppages are contributing to domestic coal production in China not rising to levels as high as the government desires. Commodore Research expects that more accidents and worker deaths are in store for this year, and this will likely continue to put pressure on a ramp up in China’s domestic coal production. With Chinese power plant coal stockpiles also remaining low for this time of year, there is potential to see at least a small increase in Chinese thermal coal import demand in the near-term.

Also remaining of much importance is that China has been seeing a shift in its thermal coal-derived electricity generation in recent months, and that has led to great coal consumption. In particular, the most recent Weekly China Report published by Commodore Research discusses how the latter months of 2016 saw China’s thermal coal-derived electricity production grow year-on-year by 13%. Earlier in 2016, the first seven months of the year saw only 0.2% year-on-year growth. With China seeing a shift in thermal coal-derived electricity generation growth recently, and with coal production growth still lagging, the near-term could easily see a pick-up in Chinese coal imports. This would help aid several segments of the dry bulk market.
Source: Commodore Research & Consultancy